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Ford to Redeem 7.50% Notes

Zacks Equity Research

Ford Motor Co. (F) announced that it will start redeeming all the 7.50% outstanding notes due June 10, 2043 from February 4, 2013. The notes worth $690.0 million were issued by the company on June 25, 2003 and $592.7 million was outstanding.

With respect to the terms of the notes, the company will redeem 100% of the principal amount outstanding together with the accrued and unpaid interest. For example, for each $25 in principal amount, the redemption price would be $25 plus accrued and unpaid interest of 28 cents. The Bank of New York Mellon will act as an agent for the transaction.

Ford posted a 17.6% rise in earnings per share to 40 cents in the third quarter of the year from 34 cents a year ago, driven by impressive results in its North American operation and, to some extent, its Asian operation. With this, the company has also surpassed the Zacks Consensus Estimate by 10 cents per share. Total profit rose 15.6% to $1.6 billion from $1.4 billion a year ago.

However, total revenue in the quarter slid 3.0% to $32.1 billion due to lower revenues in South America, Europe and Financial Services operations that offset the marginal improvement in revenues in North America and Asia. However, revenues were higher than the Zacks Consensus Estimate of $31.0 billion for the quarter.

Ford had cash and marketable securities of $24.1 billion as of September 30, 2012, up from $20.8 billion in the corresponding period a year ago. Total Automotive debt remained unchanged year over year at $14.2 billion at the end of the quarter.

Michigan-based Ford is one of the largest automobile producers in the world. The company operates in two segments: Automotive and Financial services. Although the company’s primary selling ground is the U.S.; Europe, South America and the Asia-Pacific constitute its other major markets.

Ford, whose cross-town rivals include General Motors Company (GM), maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. Consequently, we have a Neutral recommendation on the stock for the long-term (more than 6 months).

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